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Carrollton Hospitality, LLC v. Kentucky Insight Partners Ii, Lp

United States District Court, Sixth Circuit

October 31, 2013

CARROLLTON HOSPITALITY, LLC, et. al., Plaintiffs,
v.
KENTUCKY INSIGHT PARTNERS II, LP, Defendant.

MEMORANDUM OPINION & ORDER

GREGORY F. VAN TATENHOVE, District Judge.

This matter is before the Court on Plaintiffs' Motion to Remand. [R. 22.] Plaintiffs Carrollton Hospitality, LLC (Hospitality), Carrollton Host Enterprises, LLC (Host), Holiday Host, LLC (Holiday), and Lloyd Abdoo, assert that the amount in controversy is less than $75, 000.00 and should be remanded for lack of diversity jurisdiction. [Id.]

I

Plaintiffs are limited liability companies, and the managing member of these companies, who own and operate hotels in Carrollton, Kentucky. Plaintiffs receive cable television services from Insight. Hospitality filed a complaint in Carroll County Circuit Court on October 12, 2012 requesting injunctive relief and damages for breach of contract. [R. 1-1.] Insight Kentucky was served on October 15. [R. 1-1.] On March 14, 2013, Hospitality filed an amended complaint in Carroll County Circuit Court which added Host, Holiday and Lloyd D. Abdoo as Plaintiffs in this action. [R. 1-2.] The amended complaint also added claims for fraud and punitive damages.

Insight Kentucky's notice of removal was filed on April 18, 2013. [R. 1.] Insight served answers and amended answers to the Plaintiff's first amended complaint on May 4 and May 7. [R. 4, 5.] These answers included counterclaims against Hospitality, Host and Holiday [Id.] which were, in turn, answered by the parties on May 31. [R. 7, 8, 9.] On July 31 the Plaintiffs filed their Motion to Remand. [R. 22.]

II

A defendant may remove a civil action brought in state court to federal court only if the action is one over which the federal court could have exercised original jurisdiction. See 28 U.S.C. §§ 1441, 1446. This Court has original "diversity" jurisdiction over all civil actions when "the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and the dispute is between" parties who are "citizens of different states." See 28 U.S.C. § 1332(a)(1).

Because federal courts are courts of limited jurisdiction, any doubts regarding federal jurisdiction should be construed in favor of remanding the case to state court. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-109 (1941); Cole v. Great Atlantic & Pacific Tea Co., 728 F.Supp. 1305, 1307 (E.D. Ky. 1990) (citations omitted). In determining the appropriateness of remand, a court must consider whether federal jurisdiction existed at the time the removing party filed the notice of removal. Ahearn v. Charter Twp. of Bloomfield, 100 F.3d 451, 453 (6th Cir. 1996). Further, the defendant bears the burden of showing that removal was proper. Fenger v. Idexx Laboratories, 194 F.Supp.2d 601, 602 (E.D. Ky. 2002) (citations omitted). When a complaint fails to pray for a particular amount of monetary relief, a defendant's burden is to show that the amount in controversy is met by a preponderance of the evidence; otherwise stated, it is more likely than not that more than $75, 000 is at issue. Rosenstein v. Lowe's Home Centers, Inc., 2007 WL 98595, at *1 (E.D. Ky. 2007) (citations omitted). Here, there is no dispute that the parties are diverse. [R. 22-1 at 2.] The contention between the parties is strictly over the amount in controversy.

As explained by Insight, Hospitality seeks a release from contract obligations, compensatory damages, punitive damages, and attorney's fees. [R. 23 at 4.] The March 10, 2011 contract obligated Hospitality to pay $742 a month and was terminated with 65 months remaining, resulting in a disputed $48, 230 in contractual obligations. Hospitality seeks compensatory damages hailing from a $9, 675.69 payment made to Insight in September 2012 and a one-time installation fee of $625.40. [R. 23 at 4; R. 18 at 2.] Further, Insight alleges Hospitality seeks to avoid $8, 626 in a past balance owed. [R. 23 at 4.] Finally, Insight estimates Hospitality's punitive damages claim at $30, 903.27 based on a statement made by Hospitality that punitive damages are three times compensatory damages. [Id; R. 18 at 2.] The total of all these claims, excluding attorney's fees is $98, 060.36. Host has a contract with Insight that is valued at $905.24 per month. Host seeks to be released from these contractual obligations. [R. 23 at 4.] The contract had 59 months remaining at the time of removal. Insight estimates the value at $53, 409.16 plus attorney's fees. [Id.] Holiday is in a very similar position to Host. Holiday, seeks relief from a contract valued at $927.50 per month that had 59 remaining months at the time of removal. [R. 23 at 5.] Insight estimates the value of this obligation at $54, 722.50, exclusive of attorney's fees. [Id.] Mr. Abdoo seeks compensatory damages for breach of contract, anticipatory breach of contract and fraud. Abdoo seeks repayment of $9, 675.69[1] and $50, 000 worth of punitive damages. [R. 23 at 5.] With regard to the valuing the contracts that Plaintiffs seek to rescind, Insight believes that "the contract's entire value, without offset, is the amount in controversy." Rosen v. Chrysler Corp., 205 F.3d 918, 921 (6th Cir. 2000).

Insight argues that punitive damages sought by Hospitality and Mr. Abdoo must be considered when calculating amount in controversy. [Id.] They argue that a provision in the cable contracts indicating that punitive damages are not recoverable has no impact on this calculation. They suggest that since punitive damages were demanded in the First Amended Complaint, they must be considered.[2] All parties except Mr. Abdoo seek attorney's fees. Insight argues these must also be considered in calculating the amount in controversy. [R. 23 at 9 (citing Williamson v. Aetna Life Ins. Co., 481 F.3d 369, 376 (6th Cir. 2007)).]

When all the aforementioned is considered, the "total amount in controversy, excluding attorney's fees, is $98, 060.36 for Hospitality, $53, 409.16 for Host, $54, 722.50 for Holiday and $59, 765.69 for Mr. Abdoo." [R. 23 at 9.] By this calculation, Hospitality's potential recovery easily surpasses the jurisdictional minimum. Insight argues that all parties potential recoveries will surpass the amount in controversy threshold when attorney's fees are also taken into consideration but argues, alternatively, that claims of Host, Holiday and Mr. Abdoo should be granted supplemental jurisdiction as they arise out of the same core facts. [Id.]

Plaintiffs assert that the amount in controversy is less than $75, 000.00. [Id.] They dispute the applicability of Rosen v. Chrysler Corp., 205 F.3d 918, 921 (6th Cir. 2000), the calculated damages attributable to Hospitality, the calculation of attorney's fees and the application of punitive damages.[3]

A

In Rosen v. Chrysler Corp ., the Sixth Circuit held that "in cases where a plaintiff seeks to rescind a contract, the contract's entire value, without offset, is the amount in controversy." Rosen v. Chrysler Corp., 205 F.3d 918, 921 (6th Cir. 2000). Insight depends on this rule in valuing the equitable claims. Plaintiffs argue that Rosen is distinguishable on two grounds. First, the subject matter in Rosen was different as that case dealt with claims for recission of contracts for the purchase of vehicles. Plaintiffs argue that the services provided by Insight "are more akin to utilities which the Plaintiff will necessarily need to replace at potentially the same or greater expense." [R. 24 at 2.] To this end, plaintiffs state that the "financial effect would be nominal." [R. 22-1 at 5.] Second, in Rosen the recission was sought because of complaints regarding the quality of the vehicles. In this case, Plaintiffs seek recission "to avoid the coercive collection tactics" allegedly employed by Insight. [R. 24 at 2.] Plaintiffs argue that the "reliability of the provider or essential services to the hotel" is the key right they seek enforced and that this should be the basis for calculating the amount in ...


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